With Facebook, Intel, Cisco, Sprint, Amazon, Nvidia, LG, Sony, Rakuten, Ericsson, Nokia, etc. out, the gig was up. Other big conferences in trouble too. Tourism industry is reeling.
By Nick Corbishley, for WOLF STREET:
The novel coronavirus, now named COVID-19, claimed a fresh victim outside China: the world’s biggest mobile trade fair, the Mobile World Congress (MWC). Contagion fears led a roster of tech and telecom companies, many of them non-Chinese, to announce they will be steering clear of the event, scheduled to take place in Barcelona on Feb 24-27. After dozens had pulled out, the event was canceled this evening.
The MWC has been an annual event in Barcelona since 2006, a key showcase for global tech giants and telcos. It attracted 110,000 people from almost 200 countries last year, including more than 5,000 from China. That sprawling global reach, once considered a major attraction, would make the event a perfect melting pot for transmission of COVID-19.
The first company to drop out, South Korean device manufacturer LG, also pulled out of Integrated Systems Europe, an Amsterdam audiovisual trade show, citing advice from the World Health Organization (WHO) that individuals should “promote social distancing” to minimize contagion of the virus. LG’s decision to withdrawal from the MWC last Friday sparked an exodus of industry stalwarts including Intel, Cisco, Sprint, LG, Sony, Ericsson, Facebook, Nokia, Amazon, Rakuten and Nvidia. On Wednesday, major carriers Vodafone, British Telecom, Orange and Deutsche Telekom joined the exodus.
Until today, the GSMA still insisted in public that the show must go on, even as the list of participating companies dwindled, hotel cancellations surged and the pressure mounted to cancel the event altogether.
GSMA last week unveiled a battery of measures to reduce the risk of contagion, including the intensive disinfection of surfaces, banning travelers from the Chinese province of Hubei (home to Wuhan), forcing all other Chinese participants to prove they have been out of China for at least 14 days prior to the conference, and taking the temperature of participants at all entrance points — despite new research showing that these measures might be ineffective.
Yet, some companies still wanted the event to go ahead, including the two Chinese giants, Huawei and Xiaomi.
The cancellation entails significant economic consequences:
- The world’s biggest tech firms, unicorns and start-ups miss out on the chance to showcase their latest products to their biggest customers on the largest stage. Instead, they will have to launch their new products through their own marketing channels.
- Airlines and travel agents will lose out on flights, tours, and other travel services of tens of thousands of customers.
- Hotels in Barcelona are already reeling from a huge wave of cancellations. What should have been one of the busiest weeks of the year for the local tourist industry could well become one of the quietest.
The event generates 14,000 temporary jobs and around half a billion euros for the city each year, much of which ends up in the pockets of local taxi drivers, hoteliers, owners of bars and restaurants, prostitutes and their pimps and madams, Airbnb hosts, and the thousands of professional pickpockets that converge on the city for the four-day event. This year, those businesses and people will have to make do without that money.
For the global travel industry, the implications are stark. Contagion fears have already led to the cancellation of multiple events on mainland China and in Hong Kong, including Art Basel, one of the most important fixtures in the international art market calendar, and the Chinese Formula 1. Even outside the region, events have been cancelled, such as in Singapore, or have witnessed a sharp fall in delegate numbers from China, due to travel restrictions and risks.
China has become the crux of today’s global travel industry, which accounts for 10% of global gross domestic product. In 2019, the country received an estimated 142 million inbound tourists while the Chinese themselves made 5.5 billion trips domestically and 134 million trips abroad.
By contrast, during the SARS outbreak of 2002-03, China’s role as both a travel destination and a source country was small, receiving fewer than 38 million tourists and sending just 17 million tourists abroad. Even so, the SARS outbreak still resulted in a drop in international tourist arrivals of almost 9.4 million and losses of between US$30 billion and $50 billion.
This time around, given the much larger footprint of China’s travel industry, global travelers to China, and Chinese travelers around the world, the drastic actions taken to halt the spread of COVID-19 will have a much larger impact on the global travel industry. By Nick Corbishley, for WOLF STREET.
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